Nasty Gal hires the nas­ti­est girl of the ’90s, Court­ney Love

Bloomberg Businessweek (North America) - - Contents - �Keith Naughton

1990s. Back then, they were dis­par­aged as “cute-utes,” lack­ing the power and pres­tige of the big, testos­terone-fu­eled Hum­mers and Nav­i­ga­tors Detroit was churn­ing out.

To­day, much like flip phones be­gat smart­phones, cute-utes have mor­phed into stylish mod­els packed with the lat­est safety and in­fo­tain­ment tech­nol­ogy. “The compact SUV is very sim­i­lar to a mid­size car, only taller with more flex­i­ble cargo ca­pac­ity,” says Jes­sica Cald­well, a se­nior an­a­lyst for Ed­

Compact SUVS owe a debt to the hum­ble mini­van. The rise of those slid­ing door-equipped be­he­moths three decades ago showed there was a bet­ter way to haul kids and their gear to school and soc­cer games than just cram­ming ev­ery­body into the back seat of a Ford Taurus. But for all their util­ity and re­spectable fuel ef­fi­ciency, mini­vans were sad­dled with a dowdy mom-mo­bile im­age that pre­vented them from over­tak­ing tra­di­tional fam­ily sedans. An­nual sales of mini­vans have fallen by half over the past 10 years. To­day, compact Suvs—seen as more of a cool kids’ con­veyance—out­sell mini­vans more than 6 to 1.

Safety also is a fac­tor. Craig Soll­man, who works at the lo­cal wa­ter util­ity in Greenville, says his wife feels more se­cure in their RAV4 be­cause she rides above traf­fic. “Peo­ple feel safer when they are up higher and have a bet­ter view of the road,” says Ed­’s Cald­well. “Whether it’s true or not, that doesn’t mat­ter, be­cause that’s the per­cep­tion.”

In this case, re­al­ity does match per­cep­tion: Small SUVS have a rate of 23 driver deaths per 1 mil­lion ve­hi­cles, com­pared with 35 for mid­size cars, ac­cord­ing to an anal­y­sis of fed­eral crash data by the In­sur­ance In­sti­tute for High­way Safety.

The SUVS have a weight ad­van­tage, “and more weight is pro­tec­tive in crashes,” says Russ Rader, a spokesman at the IIHS. “There’s also a safety ad­van­tage in sit­ting up higher in the ve­hi­cle be­cause that puts a driver a lit­tle above the point of im­pact in crashes.”

Th­ese at­tributes have given compact SUVS cross- gen­er­a­tional ap­peal. Baby boomers, who spurred the SUV craze a quar­ter-cen­tury ago, are mov­ing down from big rigs such as Ford Mo­tor’s Ex­plorer and Toy­ota’s High­lander into the smaller mod­els as their chil­dren leave the nest. Mean­while, those chil­dren, who “grew up in SUVS,” are choos­ing them as they en­ter their baby- on-board years, says Bob Carter, Toy­ota’s top U.S. sales ex­ec­u­tive. “The un­der-35 mil­len­ni­als are buy­ing ’em up,” he says.

To help meet de­mand, Toy­ota be­gan im­port­ing RAV4S to the U.S. from Ja­pan last year, sup­ple­ment­ing the au­tomaker’s Cana­dian fac­tory, which has been op­er­at­ing full tilt. Sales of the model jumped 18 per­cent in 2015, to 315,412 ve­hi­cles, push­ing it past Ford’s Es­cape to be­come Amer­ica’s sec­ondbest- sell­ing compact SUV. Carter pre­dicts that within five years the RAV4 will sur­pass the Camry, which has been the top-sell­ing car in the U. S. for the past 14 years. Honda’s CR-V re­mains the No. 1 compact SUV, with 2015 sales to­tal­ing 345,647. It came within 10,000 of top­ping the Ac­cord sedan, which fin­ished se­cond to the Camry.

Low gaso­line prices of about $2 a gal­lon have helped fuel the lat­est run on Suvs—and are even en­cour­ag­ing a re­vival in compact pick­ups. But an­a­lysts say small sport-utes won’t need cheap gas to sus­tain sales. Ac­ci­den­tavoid­ance giz­mos, elec­tronic lift­gates, fancy sound sys­tems, and Web and text ca­pa­bil­i­ties cov­eted by con­nected con­sumers have made small SUVS far more cus­tomer-friendly than the util­i­tar­ian trucks that in­spired their cre­ation.

“Im­prove­ments over the last 5 to 10 years have been re­mark­able,” LMC’S Schus­ter says. “There isn’t a big dif­fer­ence now be­tween sim­i­larly sized sedans and SUVS.”

Smaller SUVS also have shed their rough-and-ready looks for swoopy styling that bor­rows more from the sedans they’re re­plac­ing than the off-road­ers they once as­pired to be. “We’ve moved be­yond the boxy, small SUV,” says Mark Wake­field, man­ag­ing di­rec­tor and head of the Amer­i­cas au­to­mo­tive group at con­sul­tant Alixpart­ners. “It has evolved into a tall car that drives like a car and has al­most no sac­ri­fices.”

“Im­prove­ments over the last 5 to 10 years have been re­mark­able. There isn’t a big dif­fer­ence now be­tween sim­i­larly sized sedans and SUVS.” ——Jeff Schus­ter, LMC Au­to­mo­tive Work­ing Ti­tle stays quirky in an age of block­busters


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24 The bot­tom line De­mand for small SUVS is fast eclips­ing that for fam­ily sedans, which had been Amer­ica’s most pop­u­lar car type since the ’50s.

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